Dec 15, 2023 - Business

SEC turns down Coinbase's request to issue crypto rules

Illustration of a gavel hovering over a pattern of crypto coins about to smash one.

Illustration: Aïda Amer/Axios

The U.S. Securities and Exchange Commission on Friday turned down Coinbase's request to create crypto-specific rules, prompting the company to file an immediate court challenge.

Why it matters: Coinbase has been waging a war against the regulator, which it views as hostile to cryptocurrency, and purposefully keeping rules murky so it can enforce them at its discretion.

Flashback: Coinbase submitted its request to the SEC in 2022, and earlier this year asked a court to force the agency to finally respond.

Details: Out of the five commissioners, three (including SEC Chair Gary Gensler) voted to rejection Coinbase's request, while two disagreed.

What they're saying: "I was pleased to support the Commission's decision for three reasons," Gensler wrote in a statement.

  • "First, existing laws and regulations apply to the crypto securities markets,” he said.
  • “Second, the SEC addresses the crypto securities markets through rulemaking as well.“
  • Third, it is important to maintain Commission discretion in setting its own rule-making priorities," he added.

The other side: "No one looking fairly at our industry thinks the law is clear or that there isn't more work to do," Coinbase general counsel Paul Grewal posted on X.

  • "We're grateful that two Commissioners disagreed with the denial and called for real dialogue. We should be working together to create laws and rules that will benefit consumers and US innovation, not defending lawsuits based on legal positions that change month after month," he added.

What's next: Coinbase has filed a "petition for review" in the Third Circuit appellate court to challenge the SEC's decision, according to a spokesperson.

Go deeper: How the largest U.S. crypto exchange is brawling with the SEC

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